PNTG - Earnings call transcript Q1 2024

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Operator

Good day, and thank you for standing by. Welcome to The Pennant Group First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the call over to Kirk Cheney, you may begin.

Kirk Cheney

Thank you, Michelle. you us thank and everyone, for today. joining Welcome,

have our COO; CEO; with Lynette me Gochnour, Guerisoli, I today, and Here John Brent our our CFO. Walbom, and President

XXXX. X, be these May I today, on want available replay XX-Q yesterday. call to replay announcement We X:XX this will may begin, Before Time section Mountain XXXX, housekeeping all statements Investor of on who anyone of on will We been, call. This nor made they until a listening at of of and p.m. remind press and earnings this not May our X, as is matters. website a be we our release to website filed have today's have the our statements be updated call Relations available also that are few A after www.pennantgroup.com.

in beliefs materially statements uncertainties today's assumptions cause forward-looking those business and any current management's actual that Also, expectations, environment we implied or made expressed on from call. statements about to risks results and our based our subject to are which operate. and differ could today on the are These

new a any publicly of undertake for Pennant as or revise future update circumstances and should factors our filings laws, result reliance Listeners undue forward-looking forward-looking not any where its encouraged as required to discussion affiliates on reason. Except SEC results. place review arise to that and statements changes events, securities our for other statements do complete not more or impact a information, are of could federal by changing

direct such the assets, of holding Pennant with resources, to information Group operating -- employees company or through Pennant subsidiaries. contractual human risk and subsidiaries, holding payroll, legal, center, with referred other our accounting, The as collectively independent The management addition, Certain relationships to Group the provide Inc. In technology, a services revenues. is other a operating service subsidiaries no is

us and consolidated our company, Inc. Pennant, refer The words Group, and its to subsidiaries. Pennant we, The

are separate and it terms and All construed today assets. us, activities as to its that of subsidiaries the company operated our imply Group, of nor we, assets, and revenue their Pennant our not or has are have operating References that that The use by the management, similar of and the the center meant direct own used be as here consolidated terms any employees into assets and should by are meaning independent Inc. or subsidiaries Pennant The well Group. as companies operated service employees operating

GAAP our upon relied they reconciliation our our non-GAAP When with our we of and in believe XX-Q. a together to of more release provide to understanding reports. is exclusion available business, the metrics. The supplement non-GAAP viewed we GAAP complete GAAP with should available yesterday's not that but reporting measures Also, press GAAP is these results, can be in

I with the to turn And our will CEO. Brent Brent? that, Guerisoli, call over

Brent Guerisoli

Thanks, Kirk, quarter our XXXX call. everyone, first and earnings to welcome,

each day. local care and residents our share deep I we want to express Before leaders patients to teams appreciation who for the and results,

for do. foundation success, Pennant's you are grateful the You we of are The and all

million quarter, are QX to that great a of our a On $XX.X consolidated quarter the We pleased XX.X%. to the million or start basis to was $XXX.X a prior report strong by increased year. and compared year revenue

per employee $X.XX margin clinical by our by areas: X excellence, $X.XX increased million $X.X share our increased or XX.X%, committed Our development, EBITDA adjusted of earnings key leadership XX.X%. experience, to We remain of and or growth. improvement focus and $XX.X million

momentum systems on our the are across business investments in fundamentals created core Focusing people, as foundation in bearing these has our a growth significant and firm fruit. company and

priority. a Leadership top remains development

CCOs continue we in and throughout robust Clinical CEOs a we discussed focused the and throughout C-level now year. prior driving are and leaders, their As local grow pipeline well in Officers are diligently developing Chief There XX leaders. and other to on as develop our the results progress consistently to of to to as CEOs expect commitment XXX organization, ranks quarters, we've XX continue local we

As of our their achieve performance, to financial reminder, only also and extraordinary must leaders a not earn clinical improvement title in the culture significant but growth, operations. CEO, drive

roughly as in that more our well found Directors $X as have cultural We CEOs better Executive and earnings typically outcomes. than million annual clinical generate

progress to and meaningful as gains margin points X.X% leaders who EBITDA diligence fundamentally adjusted making improved discipline also operations, attribute talented results. first, develop consolidated are they exercise in is we these segment. our to connected We margin from their XX financial Year-over-year, deliver in X reflecting each on factors: basis leadership and exceptional We X.X%, margin margin. improvement to entrepreneurial

Second, our of best implement leaders these encourages And model adoption and consistently sharing the innovative practices performance. improve across operating the local as best organization. they practices,

clinical systems their our that operational Third, to leaders we invest and in enhance tools leverage local best-in-class continue and results. to technology,

successful our segment with to year-over-year growth and expand. a growth. our to growth. transitions, represented and same-store that they home health total of operations over same-store Coupled average acquisitional acquisitional year Hospice evenly made quarter. we organic in organic the daily recent percentage Turning meaningful as on XX.X% established the at increased culmination increases side, exemplifies the significant record integration and split and This potential between This prior of a Health several hospice quarter, revenue leading the highlighted Home was exists efforts both mature have QX admissions census. by and double-digit

of teams occupancy improvements of X prices resident occupied reflect unit provide. On the local the adjust to transition true have with buildings Along steadily services we the and Senior Living their revenue costs they The our transitioning demonstrates side, manage successful XX.X% into access new the the we've mix and new of our that segment our increased our power in effectively seen the in in per current platform. operations also while latent quarter. opportunity to Living Senior QX momentum operations quarter, revenue increased prior the model year the over as exists

a that Pennant become story is operator the our and of Pennant owners, We partnering we investors which to they upon operating key are we they best-in-class excellence ourselves. part pride execute when grow. as and something with to unique harness a want our Operational model understand

Since matured and throughout and and field we the center. as an the global challenges service the our spin-off the team of leaders have and organization a management pandemic, across added through company our at

quarter As a percentage and experienced prior result, and each EPS. we growth exceeded strong of triple-digit the in period performance adjusted earnings have have produced consecutive quarters X with year that EBITDA

do. were that that have that about We repeatedly consistently we even to going And we are encouraged more excited foundation made, and built we lies ahead. in said are the the we progress we've the while what we've done by future

on I'll turn our John quarter that, to more first provide to over With details operational results. the call

John Gochnour

Brent, morning, you, and Thank good everyone.

to pleased strong in are We both performance operating report segments.

Turning first to Hospice and our results. Home Health

is operations. XX.X% quarter. of of and of EBITDA revenue segment up same-store improvement up revenue and million million in rise Roughly was each the other new $XX.X adjusted segment year-over-year XX% the XX.X%, growth, $XXX.X million $X.X successful transition is prior attributable to $XX.X is the or the of year segment million or Our over XX% while

quarter. health over Home Medicare year In admissions year XX.X% while prior the our grew prior the total increased home Health, XX.X% over admissions quarter,

prior average over growth X.X% as XX.X% quarter robust hospice over also census the quarter year continued sequentially. prior year increased XX.X% admissions sequentially our daily and increased We and hospice and the XX.X%

strong continue to episode rate revenue quarter. In Home increased day addition, each across year both Medicare we X.X% prior health hospice growth increased revenue lines. X.X%, the see service and per per over

managed strong relationships contributing in to year investment also the excellence revenue care in over evident quarter. is with in visit is our clinical the ongoing growth per Our which partners, payer prior XX%

encouraged high-quality by providers. continue payer long and rates to To reimbursement will progress delivering efficiently. reward clinical are that the our over care that in end, We the partners make in upward trends more effective run, believe we

of rate XX.X%, clinically many underperforming X.X average reported acquisition. even remain and the of as company, well new home the transition of stars star health which operations care acute Our into at averages, of hospitalization of are CMS time national ahead we rating

leader capacity officers. program, cohort from mirrors help ambitious become We graduated CEO grow Clinical leaders new to to training which our and clinical talented, training leaders internal future first their program Chief our our of

pleased an growth, adopted to visit prior lower per total the Health and helped by report XX.X%, improvement also over improve best visits foundation cost episode growth X% XX.XX% are census for our XX.X% In in use Our segment and adjusted the by our X.X%. EBITDA to improvement margin Home efficiently from points record-breaking clinical of basis and and we per Hospice above is summary, an clinical Delivering leaders local our practices, and segment. year direct helping to margin outcome outperformance described clinical quarter. technology outstanding to XX the

increased segment increase, over revenue increased segment XX.X% positive Our a to Senior a business million and million $XX.X continued each $X.X prior Living EBITDA $X $X.X increase XX.X% or or ramp as quarter. million, year its to million, the adjusted

Additionally, to X.X% estate. lever occupancy of specifically stability an basis revenue Senior increased over business unit as to $X,XXX, same-store our drive shareholder now gives XX increased same-store quarter. real to The even occupied prior XX.X%, us the our per year purchasing points each value, Living additional

such living under of we frequently terms And are looking on senior to transaction, the the by lease track a As clinical approached a lease. proposed new producing an and with see long-term record arrangements. a strong in value operator we operator financial install communities results, of often landlords depending excellent of

other upside we operating accrues opportunity purchase thus cases, the improve that In as the have to associated and real the we capture estate results.

to cost will real XXX-unit same where execute in Living in share to we this in the our traditional home disciplined illustrates Home Senior acquiring and senior a our operations X While approach. Utah; or as Senior Living, are Utah, estate and we acquisition and XX-unit health, are the robust value locations To and Capitol represents strong a class operations-focused pleased in to Health, who, living acquired buildings capital of that significant with City, Hospice in estate senior create win-win March, instead Hill first Southgate perfectly approach estate community areas strength of real disciplined Salt asking operations. we transaction in we our in has community local St. the we deal to long do a ability operations. to leadership the The The provider strength meaningful in hospice, to evaluating apply living weighing to connected our what, short a Lake communities within then support, acquired operations. acquisitions, care George, real and place, home Utah, our of including teams cluster the Senior Pennant Living, pricing believe asset services the favorable opportunity deploying real that term, estate local end, opportunity

health home joint and the with Health On quarter, we discussed Health Home John Hospice as Muir Muir venture we X. new last Health, Home January side, initiated on a

opportunity have a meaningful place operational and is team to clinical Bay updates exceptional and in We start a performance local other work excited leaders system at with additional look Health. home put world-class about a off are to leadership to The collaboration joint effectively strong this throughout providing solutions We as and health we to the forward closely deliver leading the venture with Area venture's Homecare on Muir technology elevated implemented talented Homebase and services. the established John health year.

of on And XX, and Davis April in South May Hospice, need on home located one Bountiful, certificate acquired health and Health quarter end, Washington. we in County, we King X, Home Utah. license After acquired

existing Living the arrangement, key leaders care at of We referral in expand opportunities for and also local lease the acquired These new long-term provide operations Paramount, markets Boise acquisitions Senior area. a strength in living where of memory care XX-unit continuums our through and community Veranda and have assisted partnerships. we a

a With the to Lynette that, Lynette? I'll it hand over financials. for review of

Lynette Walbom

and and John, in for March X contained good release XX, ended Detailed you, financial XX-Q filed XXXX, everyone. yesterday. press the Thank months are results morning, our

quarter the $XX.X reported total increase ended XX, an prior For quarter. $XXX.X we revenue million the March XXXX, of year of or million, GAAP over XX.X%

cash of XXX.X% the XX, earnings March $X.XX, GAAP a at per $XX.X in ended quarter a over prior XX.X% $X.XX, of $XXX reported metrics of increase increase per months the hand on outstanding prior year diluted year credit share on non-GAAP line the earnings X include diluted for million end. also and million and over share our million quarter Key We revolving quarter. XXXX, $X.X

and Our from of for quarter. of EBITDA operations $X.X to cash adjusted net debt the flows leverage ratio million provided X.XXx

to from by a well the venture transition timing living our as to with Muir and of driven delay reflecting we Softer payment QX cash new payer cash on were flows from primarily statements, throughout the $XX under million flow program. collections including organic expect and our improvement. accounts collection strong million now line of with a as operations, we state reimbursement total a end XXXX growth, XXXX acquisitions revenue multiple joint along ramp operations a executed as cash resolved of senior with year, receivable Consistent prior the new at $XX issue bottom

And Brent few to with local leaders. to back that, I'll highlight hand of it a our

Brent Guerisoli

who every of Idaho, reflect XXXX, and communities' the our acquired in in Barber Senior aspect stellar Since engaged of Thanks, Director, Boise, success. and Clinical love community. Lynette. It's improved respect, an spotlight happy, At July created Station this to are with several Connell, have Velasquez; Officer, the leaders my organization results. results where exceptional treated Station Living, are the residents Chief Marketing and team Gary community employees has exceptional Pennant leaders Holland; pleasure Jacob Ray Director, in local achieved Executive have Barber and

increased result, has XXX%. improved As XXX% and EBITDA a occupancy

and Rogge Station's Barber bring unique In period. Hospice the Firth, exists potential ], agency's story turnover and has along the rating strong averages. Home clinical talented [ XX% and demonstrates implement CEO, ] newly which Heather local its addition, one when lowest excellence of a become X-star in based with new Executive earned Directors, and operational a senior its Angela the in has score Through leadership in the quality same improved provider that Wisconsin, state and and [ the care, leaders national Becker of of Preceptor is underperforming rates of exciting & Health Preceptor Wild leadership led Barber culture standard and Eastern fundamentals, rate hospitalization engagement model. Milwaukee, by the employee excellence set in strong has operating and living we development has Christina a leaders, operations, Kosinki across Michele our Station Rich the employer below clinical The produced XX.X%, Wisconsin. has of Milwaukee in area. to awarded well commitment acquire choice The company. team the Preceptor's and

Wisconsin also see As Preceptor Preceptor local of EBITDA prior increased living over XX.X%, has a XX stepped These has the C-level component are both each the senior developed our into improvement meaningful care key when examples is revenue and facilities. increased community caliber continuum, leaders year we XX.X% operate relationships, we quarter. of has dramatic where operations.

for audience please up the procedure? on it questions. the open we'll you that, Q&A With Michelle, can instruct

Operator

first Our with from Instructions] Hendrix Markets. question [Operator Capital RBC comes Ben

Benjamin Hendrix

and Congratulations follow-up -- on the programs. your quarter. Question on CEO just on your clinical leadership

and can of Just the wanted pipeline are. item progressing to the kind kind X And of what the given how graduating the see timing of of that markets, is we And biggest see that to the these gating nature segments? classes development? in that fragmented

Brent Guerisoli

Ben. Yes. Great question,

bit quarterly really the it on program quicker are these the part, The individuals most on we ongoing just going based that lot into little more ways, programs we the bring it's year. throughout a is that the on And in CEO a of related For cohorts a to are the cycle. development cycle. is the organization. program, clinical -- And the

is we about to we've as focus. So primary grow why continue talked our that's -- leadership

We are grow leaders. in bring going we great as to talented

to the in bringing them with leaders The that's clinical it leaders And that time, and to important other operating how a leaders. we also build is do in business. long clinical business other we emphasize addition thing the a to and thing really can develop about important clinical understand we've here, most partner to incredible talked for high-caliber are

financial we're results exciting to effective -- continue think leaders just a we're what's in way, and as is clinical I follow. as improved seeing clinical we've those results to more And see our so developing

Benjamin Hendrix

us your off a any percentage from on of Standard Standard estate Great. stayed there kind strategy. real And Bearer? estate that by remind Can Ensign? owned follow-up on real then operate you spun you is purchase when what you real with estate the that options of Bearer are And

John Gochnour

Yes.

by estate with around real properties. couple real our have key of came don't A Ben, So majority spin. highlighted options large you couple a Bearer is purchase on -- of our partnerships. our owned a during We a the Standard those and and really estate things, us of strategy revolves

relationship We Continuum. continue Pennant the as Ensign landlord our partner Care Ensign with to well enjoy in a as really as great our

And avenue have be we so and they opportunities that living opportunities senior an partner continues where to with them. see to

worked what's relationship who our Standard think best finance for of the can closely determine that I exciting our partner Bearer? sense can a partner to period we're a most transaction, then it we've we've and to potential to look way where with in it it sheet makes community Is progress. that. about happening capital? is now at we attack the in kind with what's partner that for Is operational -- that our to a way own what's use another Is And the to with? balance develop we

this what balance transactions X a we already relationship a and after-acquired then And quarter here the favorable real and did piece long-term the so we our a that's is lease that sheet, then acquired we using had you with. landlord estate with in saw

Bearer. So have the or Standard with Ensign excited to to value with opportunity Also, using acquisition. relationship in for excited Standard real estate our of and tapping new have kind we about be Bearer balance this sheet they're creation that progress we're through making continue and

Operator

Our from Stephens. next question with comes Scott Fidel

Scott Fidel

Okay.

forecast Results wanted results maintained how consensus. in just our expectations. and you same to definitely get came the guidance. relative to XQ came question, At on your in feedback the First above your time,

potentially raise continue? XQ curious to came how versus sort guidance would your then what if And the to of sort of on trends in So these plan. just look results be triggers

Brent Guerisoli

question. Yes. the Thanks for

very puts was it us. us end at a guidance our for well the would strong this certainly we've This top what what I on think And by QX. I encouraged And really say very in pace seen as end continue quarter point. ahead we've in confident for of we're also, in throughout same of don't the is the we will the QX of want time, we that far that, anticipate momentum that And at but too we we're ourselves. get the seen to year. --

So anticipate to throughout do saw But year. progress approach we see guidance the the we maybe we the in there. then conservative to continue would on we're a in if making later adjustments QX, that taking

Scott Fidel

but the helpful to at staying where the think Okay. higher first point prudent range sort within the outlook Understood. And about towards get of the certainly, fair to sort visibility you of the remain after this on end quarter.

question, Second your some trending from the percentage How to visibility year over of sort the on achieve occupancy continued in growth year. increase able thinking sort had of of then the then I tempo just occupancy. of were terms to your here? over of wanted rate here get renewals, the of as balance into rate in the SL you [indiscernible] of the of you on your trends the over remind solid the course know that some sort would of course and to sort year. year of beginning from the us that the compared of as of renewed were And that room see

Brent Guerisoli

little pretty of end the seasonality holidays the -- with beginning the new that's in of the There's be our that end of a we of QX. of occupancy. bit a year, in the felt and occupancy the in beginning there downturn been the tends certainly numbers to and Yes. our some year, consistent the -- at And

performance throughout encouraging more saw occupancy What's that we or steps So generally increased the is of and seen what year. rest the we've up there. less though, flat

that's see see, of in kind your to was And of expecting what end Scott, question? what we're me, year throughout we've the remind that second regard. so we And -- the and

Scott Fidel

on the renewals year. tempo side just on over Brent, sort of Yes, of course rate the SL the the the of

Brent Guerisoli

Yes.

at this is don't across local necessarily times we different function into said, at That rates of teams. that And board go the rate So increasing the we leadership renewals have time. the board all the at same effect across part anticipate each locations. of being of the the

communities adjustments market, the throughout and at the they pressures making appropriate As look year. whatnot, the and the they're

important One or to what is other and there's really The to on we that's of elements we're our room call that X remember, care then and thing the the charges sort is second providing. actual the increases, board care this. rate

really And we're there for services so focusing the adjust those the --- appropriately that level or the really monthly -- the ensuring working a that address levels there appropriate making what to residents least at that basis, we're quarterly needs charging clinical and at them a is on we're on and doing providing, rates. on putting then sure the we're with

anticipate were would continue by about, to talked year. So encouraged growth strong rate as we that we growth throughout the we and

Scott Fidel

I And question. just had then -- Okay. more one

your X with wage progressed If us able you lines. the trends on across first inflation were to provide update an in business quarter how the

I across you sequentially of the X us. you figures sort show did think lowering the of share each it helpful were would able with increase rate traction be to that and of but lines, if business some

John Gochnour

pressure. And wage to in to and about Scott, Yes, we translating service significant increase overall some wage think X% see a you're lines that seeing inflation it's I pressure. both continue

we'll actually changes a the to see normalization I continue of that of the not quarter, reimbursement disappointing, tick more first right? hope case we're bit back little the think which sort inflation corresponds that that more to saw the That's and with direction, yet. wrong in in receiving. back a in We was we wage

manifesting the I that's our improvement we're as think And what improvement we've to I driving what our are we're employee and in scores. seeing turnover. those seen is And is ability manage themselves trends. in some -- more think there engagement to effectively. positive able are seen We've

able to the manner. we're and the even that we're on spite so part side And manage seeing a inflation more you're pressure cost in margin in in effective that improvement of the labor because experiencing

segments would that's And just I is both it's on -- kind X% in a year-over-year so say still what of basis.

is year-over-year, QX in outside our expectations. still of at but I to long-term from ticked in think X% looking up which significant year, X.X% that we're X.X% still it and this

Scott Fidel

and just in HHH, health then is across Okay. hospice X% those pretty trends? within consistent Understood. of home that terms And the

John Gochnour

the look operations Yes. health so many And hospice combined as operate because at continue segment that home both we to provider. of and our

while So it inflation to keep sense in cases the it the bifurcate side, combined. some on we data labor makes

Operator

no to for closing Guerisoli like showing remarks. I'm call over I'd turn back further Brent the questions. to

Brent Guerisoli

thank joining and us everyone, Michelle, you, for you, today. Thank

Operator

for Thank participation. the does you have now you This your may conclude day. and great a Everyone, program, disconnect.

The Pennant Group, Inc. (PNTG) 7 May 242024 Q1 Earnings call transcript